HANOI -- While the noncommunist nations of Southeast Asia continue to expound their policy of isolating communist Vietnam, western and Asian businessmen are finding that stance more and more untenable as Hanoi liberalizes its economy and makes overtures to the outside world, diplomats say.
When foreign ministers from Southeast Asia's noncommunist countries met with their western allies in Singapore last month, they concluded the annual conference with the usual tough talk about keeping up the economic isolation of Vietnam to pressure Hanoi's leaders to end their eight-year occupation of Cambodia.
"The political, diplomatic and economic pressure imposed on Vietnam must be sustained," said Singapore's foreign minister, S. Dhanabalan.
U.S. Secretary of State George P. Shultz added: "It is imperative to keep pressure on the Vietnamese to end their occupation. Essential to this effort . . . is the continued isolation of Vietnam."
Despite the harsh language, however, Vietnam's "economic isolation" appears to be slowly eroding, as Hanoi's new leadership tries to revive its moribund economy through liberalizing reforms and overtures to the outside world for trade and investment.
As Vietnam opens its doors, many western and Asian businessmen are finding the old isolation policy difficult to uphold.
Vietnam's largest noncommunist trading partner is Japan, which takes Vietnam's abundant fish, shrimp and dried squid in exchange for consumer items such as television sets and radio-cassette recorders. Some diplomats put Japan-Vietnam trade at about $220 million a year.
Vietnam's second largest noncommunist trading partner is Singapore, with more than $200 million in trade with Vietnam annually, according to estimates by communist officials and western diplomats here.
Much of that trade, however, consists of goods routed through Singapore from other countries in the noncommunist Association of Southeast Asian Nations or ASEAN. Thailand, particularly, uses Singapore's good port facilities as its conduit for trade with Hanoi.
Market stalls and private storefronts here and in Ho Chi Minh City boast Thai-made shirts and blouses, blue jeans and some of the latest rock cassettes that are available on the streets of Bangkok.
In Ho Chi Minh City, officials at the No. 1 Frozen Seafood Export Co., one of Vietnam's most profitable state firms, said they regularly travel abroad to negotiate trade contracts.
Officials of the seafood company, which made about $17 million last year, said 25 percent of that amount was in trade through Singapore, using seven different companies as contacts. Hanoi, in return, received plastics, fabrics and consumer goods.
Japan accounts for about 23 percent of the seafood company's trade, and works through four companies, the official said. The consumer goods Japan delivers to Hanoi also include sewing machine parts and spare parts for the many Honda motorcycles plying the streets of the city.
The official said that Vietnamese ships regularly go to Singapore loaded with seafood. Much of it, she said, is destined for Western Europe and Canada, once the labels are changed to erase all traces of Vietnamese origin. Many of the companies involved in the trading are not Singaporean, she said, but use Singapore as their headquarters.
In an interview recently, Singapore's ambassador to Washington, Tommy Koh, conceded that his country's trade with Vietnam posed a somewhat embarrassing problem for Singapore, which often has taken the lead in criticizing other nations, particularly Japan, for business dealings with Hanoi.
But Koh countered that Singapore's trade with Vietnam is a fraction of its total trade volume, and at any rate, it is in private hands, out of government control.
In April the ASEAN countries protested Japan's increasing business links with Hanoi.
A private delegation representing scores of Japanese businesses had just announced plans to set up a trade mission in Vietnam. In the words of one Indonesian official, this threatened to "unravel the ASEAN game plan" of isolating Hanoi.
Japan's response to the ASEAN protest was simple: What about your own backdoor trade with Hanoi?
Vietnamese Foreign Minister Nguyen Co Thach, in an interview in Ho Chi Minh City, belittled the ASEAN isolation policy. "The isolation called for by ASEAN means they would like to monopolize trade with Vietnam," he said. "They are afraid of competition for that trade with the Japanese."
Now Southeast Asia's newly visible trade relations with Vietnam have forced government officials to redefine the purpose of the original policy of economically isolating Hanoi.
Indonesian Foreign Minister Mochtar Kusumastmadja, in an interview last month in Singapore, conceded that the noncommunist countries do conduct private trade with Vietnam despite official government policy, but argued that a certain amount of trade actually helps efforts to pull Vietnam into the western orbit.
"What we are against is aid and investment," Mochtar said in the interview. "It's not our intention to kill off private initiative completely. We want some private trade . . . a certain amount of private enterprise is healthy. Our intention is to deny them large-scale economic credit and assistance."
Yet even that task seems more and more difficult. Some western diplomats here said that the throngs of businessmen from Japan -- and, most recently, South Korea -- who are constantly shuttling through Vietnam are offering credit to Hanoi under generous terms.
"The Koreans are offering 720 days' credit," said one Asian diplomat. "Now the Japanese are matching the Koreans. That changes the complete picture. Vietnam is breaking out of its isolation."